Scotiabank says markets largely expect the Bank of Korea to raise rates 25 bps
to 2.75% on Thursday, partly because policymakers have strongly signaled the
move. Bank of Korea Governor Shin recently, while citing persistent inflationary
pressure, said "it is necessary to raise the policy rate at an appropriate
time." The won has depreciated about 12% versus the US dollar since mid-last
year, amplifying imported- and commodity-price pass-through. Core CPI is rising
and house prices continue to climb, raising stability concerns, while
exports—led by chips and broader tech—remain strong and are supporting growth.
Scotiabank says the Bank of Korea will join other central banks that have
recently tightened policy.
